Car dealers discriminating against Latinos, study says

DETROIT — The National Consumer Law Center warns that the prices of many auto add-ons — including extended warranties, dent protection and credit insurance — are excessive, arbitrary and discriminate against Hispanic customers.

One Michigan dealer, the nonprofit’s study found, was charging customers $349 to $5,000 for window etching even though the dealer’s cost was just $50.

“Pricing of add-ons is something we’ve been looking at for years,” said John Van Alst, the study’s primary author. “We’re an organization that’s focused on low-income consumers, and we’ve seen a lot of abuses related to add-ons.”

What’s more, he said, even if customers didn’t want to buy the add-ons, they often felt forced to just to bring the long, arduous negotiations to an end.

The Boston-based organization’s 58-page study, Auto Add-Ons Add Up, looked at data on 3 million add-on products sold from September 2009 through June 2015 at 3,000 dealerships nationwide. The key findings: “Add-ons lead to unreasonably high and inconsistent pricing, and Hispanic customers were charged more.”

The study also urged some public policy recommendations that would make pricing more transparent.

In response to the study, the Michigan Automobile Dealers Association, a statewide nonprofit trade organization representing more than 650 new-vehicle franchises, said it is not unusual for dealers to charge different prices for different products for different vehicles.

That’s just part of the free-market system, said Terry Burns, MADA’s executive vice president. Customers who don’t want to pay a certain price can negotiate a better deal or simply go down the road to another dealer that wants their business, he added.

Burns, who said he had not read the study, pointed out that many variables go into pricing. He dismissed the study’s claims of dealer discrimination.

“There is no disparate treatment,” Burns said. “We have different programs, protocols, procedures and paperwork that we complete on each transaction to make sure everyone is treated fairly. But that doesn’t mean that everybody has the same prices or financing because everyone is different.”